Home prices plunge for first time in a decade

Home prices posted a year-over-year decline for the first time in more than a decade in February as a severe cooldown in the market forced sellers to slash their listings.

The median sale price for previously-owned US homes sank to $363,000 in February, according to data from the National Association of Realtors published Tuesday.

That was a decrease of 0.2% compared to the same month one year earlier, when the median price was $363,000.

The downtick snapped a streak of 131 consecutive months in which prices had increased year-over-year – the longest run of its kind on record.

The US housing market has suffered as the Federal Reserve’s interest rate hikes drive major volatility in long-term mortgage rates.

“The speed of decline in prices is being limited by the lack of existing homes coming to market…but even the relatively low number of homes listed are taking longer to sell,” Pantheon Macroeconomics chief economist Ian Shepherdson said in note.

The most significant declines occurred in the West, where median prices fell by 5.6% to $541,000 last month, and in the Northeast, where median prices sank 4.5% to $366,100.

The NAR’s findings matched recent data published by real estate firm Redfin, which also said earlier this month that it had tracked its first year-over-year decline in home prices since February 2012.

While prices dropped for the month, the volume of existing-home sales jumped 14.5% in February to a seasonally adjusted annual rate of 4.58 million – the first increase in 12 months. Sales were still down 22.6% compared to the same month one year ago.

The spike in sales volume coincided with a drop in long-term mortgage rates last month, which sank to just above 6% in February after topping 7% last fall.

“Conscious of changing mortgage rates, homebuyers are taking advantage of any rate declines,” said Lawrence Yun, the NAR’s chief economist. “Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”

Mortgage rates have spiked again this month – raising the likelihood that the increased housing activity will be short-lived.

“A clear drop in sales in March, perhaps to a new cycle low, is likely,” Shepherdson added.